As institutional investors show a growing interest in the bank loan market, Fitch Investors Service Inc. has created a new loan products group to serve them.
Joining the ranks of Moody's Investors Service and Standard & Poor's Corp., the new Fitch group will analyze and rate individual bank loans and syndications, pooled loan and bond transactions known as collateralized bond obligations and collateralized loan obligations.
The head of the new unit will be executive vice president Robert J. Grossman, formerly head of Fitch's asset backed and industrial ratings groups.
"We've developed a very good expertise in rating CLOs and we want to leverage that into rating individual bank loans," said Mr. Grossman in a telephone interview.
"The loan is really the last asset class to be securitized. It's really an evolutionary process. First mortgages, then auto loans and credit cards, and now bank loans," said Mr. Grossman.
Fitch will only perform ratings when the issuer requests them, as does Standard & Poor's. Moody's rates the credits with or without the issuer's permission and cooperation.
Because of the complexity of loan covenants and collateral arrangements, so-called hostile ratings are not very accurate, said Mr. Grossman.
"If you do not have access to the documentation or the collateral that supports these loans, we think it is very difficult to do a quality analysis."